Black Swan doing well in Australian

There are some striking similarities between the Australian and Canadian mining industries; so it’s not surprising that Australian companies are doing business in Canada and Canadians are developing new mines “down under.”

Vancouver-based Black Swan Gold Mines has a major interest (25%) in the Gabanintha project near Meekatharra on the western edge of the Gibson desert in Western Australia. From a standing start three years ago, Black Swan has emerged as a real success story and it plans to develop independently several other gold properties in the years ahead.

The Merriland project in Queensland, for example, could be producing 60,000 oz per year beginning in 1988 so Black Swan’s 60% interest could boost its over-all gold output then to almost 50,000 oz. Also, there is still plenty of reserve potential at Gabanintha, both for conventionally-milled ore and heap leach material. Indeed, a modest heap leach project is scheduled to begin operation in the next three months which could augment existing production by another 4,000 oz per year.

The mine/mill complex at Gabanintha has demonstrated its ability to run on a sustained basis and it should be able to treat 500,000 tons of ore per year at an average recovered grade of 0.1 oz gold per ton. That being the case, gold production could actually be 50,000 oz per annum, one-quarter of which would go to Black Swan.

The project, which is located 480 miles north of Perth, was officially opened Oct 30 by State Premier Brian Burke, whose government has one of the most liberal and even-handed mining policies in the country.

Somewhat of a political anomaly, the premier (an ex-journalist), has on occasion even admitted to making a mistake. But one of them wasn’t supporting a tax on gold mining which he said would have “prohibited an expansion of the industry” and aggravated Australia’s huge trade imbalance which at last report was about $14 billion(A). His government has even set up a gold bank which will provide loans to companies for new mining projects.

At the official opening ceremonies, Black Swan President Arthur Fisher, the Scottish-born Canadian mining engineer who was previously vice-president mining at Total Erickson Resources, thanked the premier for “creating the environment that made it possible for Canadian companies to do business here.”

Fisher conceded that he never thought the Gabanintha project “would be this big” and he later told The Northern Miner that Black Swan was looking at a “net profit of over $3 million this year.” (The recent devaluation of the Australian dollar has pushed gold to over $700, suggesting his estimate could be conservative.) Although it’s still too early to accurately establish operating costs, they are expected to be approximately $210(US) per oz excluding amortization and depreciation. Talented board

Black Swan has some talented and experienced people on its board including Richard Somerville, vice- president and chief geologist for Total Erickson Resources, who also has extensive experience in narrow vein deposits. This will come in handy when Black Swan develops its Merriland property in Queensland in 1988. Ross Glanville, past president of Giant Bay Resources and probably one of the youngest vice-president valuations ever with internationally-renowned Wright Engineers of Vancouver, is company secretary and a director.

Profits from Gabanintha will be plowed back into other projects and Fisher said the company was also looking at “situations in the United States” and in Canada. Black Swan was incorporated specifically to farm in on Southern Ventures’ interest in the Gabanintha project. The latter was under-financed and unable to develop the property on its own.

Southern Ventures was set up by Dr Derek Fisher (no relation to Arthur Fisher), an Australian national who was previously a senior geologist at Derry, Michener & Booth; he did post-graduate work at the University of Toronto and has extensive exploration experience in both the Canadian and Australian mining industries. He is also a director of Black Swan and a key player in the company.

Black Swan acquired a 50% interest in the project three years ago by completing two reverse circulation drill programs. This work delineated 364,000 tons of reserves grading 0.15 oz gold per ton to a depth of approximately 150 ft. Dominion Mining entered the picture in 1985 and recognized the potential to increase reserves in the Terrell zone and elsewhere on the property.

Just recently, exploration drilling one mile northwest of the Terrells pit indicated “a substantial mineralized zone of ore grade material close to surface,” said Fisher.

For $250,000 in exploration expenditures and by paying Southern Ventures and Black Swan $1.25 million, Dominion acquired a 50% interest in May, 1986. Pre-feasibility work began in July that year and a production decision was made the following February. Current reserves are 1.8 million tons grading approximately 0.11 oz gold per ton. Mid-sized producer

By Australian standards Gabanintha is a mid-sized producer — scheduled output is expected to be approximately 25,000 oz gold in 1987-88 increasing to 35,000-50,000 oz the following year. Several new anomalous gold zones have been discovered on the 250-sq-km property and the joint venture is confident it will locate additional reserves suitable for treatment at the Gabanintha plant. A budget of $1 million per year has been allocated for exploration work.

The mine was developed at a cost of approximately $12.3 million(A) which excludes exploration drilling. Among the key expenditures was $8.5 million for plant construction (the mill is outdoors) and related infrastructure and $1 million to strip the orebody and stockpile ore for mill tuneup. Project manager Peter Wright said the production go-ahead was given Feb 10 and the project was completed by Aug 31, a period of 6 1/2 months.

The mill is 20 years old and was purchased from Atlas Copper in the Philippines. Designed to handle 60 tonnes per hour, the plant was operating at 55 tonnes during our visit because of inadequate water. The crusher, which is oversized to avoid bottlenecks, was purchased in the United Kingdom and in the next 4-6 weeks mill throughput should reach 70 tonnes per hour, he said. Common to many Australian mining operations, water is an inhibiting factor in mill throughput. The mine’s water supply is located approximately five miles from the mill site and about 1.5 tonnes is required for each tonne of ore milled. Artesian basin

The whole of Australia is actually an artesian basin and a highly saline one at that. Wright said groundwater is occasionally more saline than seawater and indeed sometimes reaches 300,000 ppm. Fortunately this is not the case at Gabanintha were water used in the plant is potable. It is pumped to the mine from wells drilled into the underground aquifer. At feasibility, specialists were sent out to find an adequate water supply which was a prerequisite to announcing a production decision.

The mill product is pumped into a standard carbon-in-leach plant comprising a train of two leach and four carbon-in-leach tanks. But a significant portion of the gold is also recovered by a gravity circuit. This process was chosen because it’s compatible with sag milling (semi autogenous grinding) which incidentally helped keep capital expenditures down. The plant doesn’t have 2-3 stages of crushing with screens etc. — only one crusher. The work index at present is around 13 but they have ore with an index of 16-17.

Ore is being drawn from two pits, the Terrells and Canterbury, both of which are located near the old Gabanintha mine workings developed at the turn of the century. (Most new Australian gold producers have some production history which is similar to Canada). Little blasting is required in the pits and free digging, rip and doze or paddock blasting techniques, are used for breaking ore and waste prior to loading in trucks. This is a major saving and offsets the project’s relatively high stripping ratio of 9:1 over mine life. Classic greenstone belt

Fish
er explained to The Northern Miner that the orebody occurs in a classic greenstone belt. The archean gold deposit is hosted by mafic and ultramafic rocks, comprising both shear controlled and stockwork type quartz vein mineralization. Several lodes contain minor pyrite and chalcopyrite but the deposit is dominantly gold with trace amounts of silver and arsenic. The average diluted grade is 0.091 oz gold per ton, he noted. Orebodies occur on both sides of a major regional structure which traverses the property.

Black Swan recently split its shares four for one and now has about 17 million shares outstanding. Working capital is over $1 million and Fisher says the recent market downturn will open up some real investment opportunities for the company. In keeping with his Scottish heritage, Fisher said the company has been run on a tight budget and will be in the future. For every $10 put into the ground, Black Swan has spent $1 on administration.